Investment
bank Credit Suisse has learned how to utilize big data to see how social
sentiment correlates with stock price. The company Netbase Solutions Inc.
provides an “enterprise social listening platform,” a new up-and-coming
technique that can keep track of multiple social media platforms and extract
data from them.
The
first key point was Credit Suisse’s case study on Coach. The author of the
article states, “What they wanted to know was if they could predict when Coach,
the luxury leather brand, was failing.” [i]
With the help of Netbase, the investment bank was able to see that Coach not
only had a plummeting stock price but that one of the causes of the slump was
the amount of negative mentions in social media.
Another
important note is how Netbase’s information can figure out current customers
wants and needs. The social media platforms today allow companies like Netbase
to collect customer feedback in real-time, allowing companies to adjust their
marketing campaigns with almost seamless lapses in time and interests. It would
be interesting to see how social media listening platforms distinguish between
the fads and trends that often rise in industries.
Not
only can current customers’ needs be met, but potential customers can be easily
attracted as well. One example the article brings up is about a failing new
product of a fast food retailer. The company executive found that, “They
quickly learned that users wanted more of a certain ingredient.” i By
looking at social media mentions, the company was able to make a quick
turnaround and have a very successful product launch.
Netbase
is not the only of its kind, but its approach is able to provide a lot to
companies that could utilize a multitude of touch-points on the Internet. Their
Audience 3D product makes it possible for a company utilizing it can receive
real-time data on psychographics, interests, media consumption, device usage
and more. [ii]
There
are still some issues left unaddressed in the article. If social media can be
linked to share price, there could be some more room of price manipulation by
any firm. What is stopping a firm from dumping its competitor’s share price by
blitzing a smear campaign that ruins the company’s reputation? Here, I feel
that social media mentions may be a weak indicator of share price and should
stay that way. Of course, online presence is a key factor in the performance of
a company, but it could lead to a suggestion that companies need to micromanage
their presence as well which can be costly and time consuming. One last point
overlooked is why more companies do not utilize these social media touchpoints.
The downside of these techniques are barely touched, almost making it seem like
an advertisement to use social media platforms.
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